How do we get through the “perfect storm?”

There’s no such thing as smooth sailing in any industry. Every month there’s a new obstacle to overcome, a new challenge to face down, a new storm cloud on the horizon.

 

And usually, there’s a break in the clouds, and we can handle those storms in turn, one after another, and life goes on. It’s true in the automotive industry, it’s true in the credit hire industry, it’s true in your industry - no matter where you work.

But at the moment, things are tough. Those clouds are arriving all at once, and we don’t have the luxury of handling problems one at a time. As 2022 continues, it looks like we’re facing a “perfect storm” for the automotive industry. And it’s having knock-on effects for the credit hire industry, affecting the parts specialists, the hire companies, and especially the repairers we rely on.

But even the biggest storm can be navigated successfully. At Cogent Hire, if we’ve learnt only one thing it’s that collaboration will see us through. The challenges are real. They’re tough. But we can all get through them. Together.

In this series, we’ll break down each aspect of this perfect storm, talk to people on the ground that are meeting the challenges head on, and share everything we’re all doing so you can chart your own course back to clearer skies.

But first, we need to know exactly what we’re facing.

 

What makes a perfect storm for the credit hire industry?

Cogent Hire MD Kirsty McKno is clear about what’s combining to make 2022 such a tough year:

“Following Brexit and the pandemic, the industry was dealing with a perfect storm in respect of capacity, repairer funding lines, parts supply and discount removal as well as resource challenges and the vehicle supply problems linked to semi-conductor chips. Now, we don’t know what the long-term impact of the Ukrainian situation will be, nor the impact of the energy and fuel hikes, inflationary pressures, and a further slowdown in the global supply chain.”

There’s a lot to unpack here, so let’s take it one step at a time and look at each issue in turn.

 

The Pandemic

While restrictions are easing, we can’t wave a magic wand and go straight back to summer 2019. Two years of lockdowns had the happy effect of reducing road accidents. Happy for drivers avoiding damage or injury, and happy for insurers who saw fewer claims, that is. But not happy for repairers who suddenly found themselves short on work and furloughing their staff.

 

Brexit

Still a contentious topic, the knock-on effects of Brexit seem to be that manufacturers have issues sourcing parts from outside of the UK, dealers have problems sourcing new cars, and the industry is seeing large shortages across the whole EV market.

 

Semi-conductor Chips (and Vehicle Availability)

We’re in the middle of a global shortage of the semi-conductor chips that are crucial to the manufacture and repair of cars. There simply aren’t enough to go around. Combine this with the effects of Brexit, and we have cars waiting longer and longer to be repaired, repairers waiting longer and longer to get paid, and hire car providers taking longer and longer to source replacement vehicles. In fact, we’ve seen a significant reduction in the number of temporary replacement vehicles available, with some manufacturers cutting ties with rental companies altogether.

 

Human Resources

The average age of a repairer in the UK is 50 years old. Without new talent to replace all those who decided to retire during the pandemic - or those who decided that they didn’t want to retrain to work with semi-conductors and computer parts instead of nuts and bolts, that waiting list for repairs will get longer and longer.

 

Energy and Fuel Costs

The whole industry has high energy and fuel overheads. A rise in costs would be bad enough, but as we’ve seen, it’s taking longer and longer for repair work to be carried out. That means bills are rocketing and money just isn’t coming in quickly enough.

 

The Move to Electric

As we’ve discussed in the past, maintaining and repairing electric vehicles needs a very specific set of tools and skills - as does working on advanced driver assistance systems. Combine this with a lack of qualified repairers, and it’s easy to see why the rise in popularity of EV and ADAS is leading to even more delays (and a risk of injury to recovery agents and repairers alike).

 

The War in Ukraine

The human costs of this horrible conflict is still being counted, and the impact clearly goes far beyond the knock-on effects for the motor industry. But the effects are there. Both Ukraine and Russia are crucial global contributors to the parts and energy industries, and a combination of damage in Ukraine and sanctions on Russia are beginning to add up.

 

So where do we go from here?

The list above doesn’t make for very pleasant reading, and it should be clear to you that we’re seeing shortages in vehicles and parts, and threats to the continued existence of repair companies large and small. But that doesn’t mean it’s time to give up and get out of the industry.

 

Quite the opposite. It’s time to do what we do best.

Over the coming weeks, we’ll talk to our partners and others in the industry and share their thoughts on the current situation and how to get through it. And as Kirsty explains, there’s one clear way to do that:

“Today’s challenges impact the whole supply chain. The way to punch through these challenges and create a sustainable industry is to deal with them together.”

It’ll take time, and hard work, but we’ll get there. Working with you, beside you, and for you.

 

That’s the Cogent Hire way.